Reduce Costs by More Effective Spending

 Is your company as effective as it can be in managing corporate spending?

            According to a recent Aberdeen Group research study, an average company can save 11% of their annual spend with better spending management. That is $11 million in savings for every $100 million in spend. 

            However, please don’t think that controlling these costs the “traditional way” will result in achieving these savings. History has proven it will not. That is because traditional approaches have usually ended in less than satisfactory results. This is because:

1.    A limited percentage of the potential savings were usually achieved. Even many of the achieved saving did not last very long. History has demonstrated that in many of these situations, the costs reappear because many of these reviews addressed the symptoms and did not address the causes; and

2.    Relying on a “new system” alone to solve your problem. It is not the only answer. Implementing a system alone is not the total answer to this very complex management issue. For example, a recent study by IBM interviewed 400 supply chain executives in 25 countries. 70% of these executives said they were “overwhelmed by data”. To effectively manage the corporate spend, they need “to make sense of the information” in order to take any corrective.

Does your Spending Management Strategy (SMS) support the strategic objectives of your business? Do your spending policies & procedures support your Spending Management Strategy? Are they all maximizing your profits?

Our firm’s Spending Effectiveness Diagnostic Review reviews our client’s present spending management strategy, policies, and procedures to identify opportunities for cost savings. 

Examples of cost savings that have been identified in past diagnostic reviews include:

1.    Vendor consolidation opportunities;

2.    Identifying overcharges & overpayments;

3.    Fraud detection & regulatory compliance;

4.    “Sacred Cow” spending;

5.    Product & part rationalization;

6.    Risk reduction opportunities.

If you would like to learn more about our work in this area, or have any questions about any of the projects that we do to help our clients increase revenue, reduce costs, or improve competitive advantage, please contact me.

Joe Bonocore

jbonocore@bonocore.com